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China’s Cosco Shipyard has signed a letter of intent to build two more cylindrical ultra-deep water drilling rigs for Norway’s Sevan Marine.

Upstream staff 25 March 2011 09:39 GMT

In connection with the newbuild orders, the company has also decided to split off its drilling activities into a separate company, Sevan Drilling, to be listed on the Oslo stock exchange.

The new rigs will be based on the Sevan 650 design and built at Cosco’s Nantong shipyard, in China’s Jiangsu province.

Cosco said the rigs would cost about $525 million each, adding under the letter of intent Sevan has the option to order an additional two rigs at the same price.

The two rigs are expected be delivered to Sevan during the fourth quarter of 2013 and the second quarter of 2014, respectively.

The deal is still subject to the board approval of both companies with formal agreements expected to be signed at a later date.

Cosco delivered Sevan’s first drilling rig, and the world’s first cylindrical rig, the Sevan Driller, last summer.

The Norwegian rig player is now creating a new dedicated drilling outfit to further develop its ultra-deepwater business.

The company aims to raise $350 million through an initial public offering, scheduled for next month, and will retain a 20% stake in Sevan Drilling.

Sevan Marine chief executive Jan Erik Tveteraas said the company sees “increasing and healthy demand” for ultra-deepwater rigs going forward.

“We believe that a separate listing will increase the visibility of the underlying values of the business to the benefit of our shareholders. Independence will act as a catalyst for further growth for both the FPSO and the drilling business,” he added.

Tveteraas will take on the new role as chief executive at Sevan Drilling, with his successor at the parent company now being lined up.

Published: 25 March 2011 09:39 GMT | Last updated: 25 March 2011 13:34 GMT

Thanks for your explanation. I understand what you mean. I just feel that the announcement would have more meat if they announced that they have secured the contract already. Is it common to announce intent? By the way, I dont really read the news because it plays with my mind and I am not sure of the intentions/agenda behind the announcement. I just want to stick to charts and candles. Assuming if dow/spx gets a reversal candle (downside) tonight, are you comfortable going long on monday even with this positive news of cosco? Just want to know how other traders think. Have a good weekend. Thank you! Smiley

shoemaker ( Date: 25-Mar-2011 18:21) Posted:

I suppose LOI indicates that there is a keen interest in the contract. Although it is not binding, this piece of news itself is already very positive since it shows that Cosco's trademark Sevan Driller round rig is starting to gain interest. And plus the fact that it is turnkey EPC is a vote of confidence that Cosco has the capability to pull off complex and high-valued contracts, which can bring in much higher in profit margin than the traditional bulk carrier ship building.

And the part about not having any material impact on the earnings? Of course the money will not be coming in by this year but in future since it is due for delivery only in 2013 and 2014.... But that US$1.05B (if contract is signed) will add to the order book which is the main driver of Cosco's stock price..

monk999 ( Date: 25-Mar-2011 16:48) Posted:

congratulations if it goes to 2.1. Smiley

sorry to play devils advocate here. was just thinking that the announcement is just a letter of intent so there is no agreement yet right? and also based on the announcement. " The above transactions are not expected to have a material impact on the net tangible assets and earnings per share of the Company for the year ending 31st December 2011." What does this mean? Smiley

errr.... you short it ? wow I sell on monday after the gap up......

Isolator ( Date: 25-Mar-2011 17:01) Posted:

BTW, over the weekend.... those analyst reporting positive on the contract mean that they are long.... And those negative mean they either miss the boat or have short position.... lol... Have a nice weekend....

wow.... good thanks!

Isolator ( Date: 25-Mar-2011 16:54) Posted:

Market price reflect future.... As I have said... this is a special break out..... A gap up to 2.10 is consider very pessimistic....

I suppose LOI indicates that there is a keen interest in the contract. Although it is not binding, this piece of news itself is already very positive since it shows that Cosco's trademark Sevan Driller round rig is starting to gain interest. And plus the fact that it is turnkey EPC is a vote of confidence that Cosco has the capability to pull off complex and high-valued contracts, which can bring in much higher in profit margin than the traditional bulk carrier ship building.

And the part about not having any material impact on the earnings? Of course the money will not be coming in by this year but in future since it is due for delivery only in 2013 and 2014.... But that US$1.05B (if contract is signed) will add to the order book which is the main driver of Cosco's stock price..

monk999 ( Date: 25-Mar-2011 16:48) Posted:

congratulations if it goes to 2.1. Smiley

sorry to play devils advocate here. was just thinking that the announcement is just a letter of intent so there is no agreement yet right? and also based on the announcement. " The above transactions are not expected to have a material impact on the net tangible assets and earnings per share of the Company for the year ending 31st December 2011." What does this mean? Smiley

No person can foresee the future. The charts and candlestick helps you in analyzing the trends and psychology. And even though you can see all signals, you can still be wrong. That is the purpose of your stop loss. Smiley

Last Friday, I was hesitant to buy at 1.81 due to mkt sentiment. But Isolator bought, so I took a gamble, almost kenna margin call. But phew. Heng heng, this wk shot up 20c. Wow 10% increase. Cosco really can either make you rich or broke, given that it can fluctuate 10c either fall or rise. Kudos to Isolator, you are really the pro. U really can foresee the future. When u shot, Japan earthquake. When u long, big contract comes in.

lol. true! Smiley

have agood weekend!

Isolator ( Date: 25-Mar-2011 17:01) Posted:

BTW, over the weekend.... those analyst reporting positive on the contract mean that they are long.... And those negative mean they either miss the boat or have short position.... lol... Have a nice weekend....

a major contract from Sevan drilling... USD1.5 bil...2 ultra deepsea drilling rigs.

BTW, over the weekend.... those analyst reporting positive on the contract mean that they are long.... And those negative mean they either miss the boat or have short position.... lol... Have a nice weekend....

Market price reflect future.... As I have said... this is a special break out..... A gap up to 2.10 is consider very pessimistic....

YES!!

Absolutely loving it !!

chris168 ( Date: 22-Mar-2011 12:59) Posted:

YEAH GO BABE!!

Doing pretty well at 1.89 now ...

congratulations if it goes to 2.1. Smiley

sorry to play devils advocate here. was just thinking that the announcement is just a letter of intent so there is no agreement yet right? and also based on the announcement. " The above transactions are not expected to have a material impact on the net tangible assets and earnings per share of the Company for the year ending 31st December 2011." What does this mean? Smiley

Next mon resume.... Those who long can sleep very well...

i think if it opens at 2.1+..

a bit risky to enter liao, wat do u think? isolator

stocksburntme ( Date: 25-Mar-2011 16:40) Posted:

sifu can buy after unhalt?

lucky, me cannot short ! because cfd got no stock to short.....

phew !

isolator, thank you very much ! long advice worked too !

rotijai ( Date: 25-Mar-2011 16:34) Posted:

too bad.. miss it..

monday should be able to see 2.1

monk999 ( Date: 25-Mar-2011 16:31) Posted:

Date of Lifting of Trading Halt *	28-03-2011
Time of Lifting of Trading Halt *	0900 hours

Peg_li 25-Mar-2011 16:36
Contact Quote!

within this year, TP still 3.0$

next week should can get 2.2$

rotijai ( Date: 25-Mar-2011 16:34) Posted:

too bad.. miss it..

monday should be able to see 2.1

monk999 ( Date: 25-Mar-2011 16:31) Posted:

Date of Lifting of Trading Halt *	28-03-2011
Time of Lifting of Trading Halt *	0900 hours

rotijai 25-Mar-2011 16:34
Contact Quote!

too bad.. miss it..

monday should be able to see 2.1

monk999 ( Date: 25-Mar-2011 16:31) Posted:

Date of Lifting of Trading Halt *	28-03-2011
Time of Lifting of Trading Halt *	0900 hours

rotijai ( Date: 25-Mar-2011 16:21) Posted:

let's see if it will unhalt today :)

btw, congras master isolato

larrysoon 25-Mar-2011 16:33
Contact Quote!

yes this is from SGX monday morning this will be the hottest topic

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